Farm-to-school programs – which bring healthy foods to children and support rural economic development and local farms, among other benefits – actually work from an economic perspective in at least one upstate New York school district, according to new Cornell research.

An in-depth analysis of such a program in the Buffalo City School District, the second-largest in New York state and by far the largest to qualify for a state lunch reimbursement program introduced in 2018, showed that not only did the program pay for itself via increased gross domestic product (GDP), there was actually a slight return on the investment.

Todd Schmit, M.S. ’94, Ph.D. ’03, professor in the Charles H. Dyson School of Applied Economics and Management, in the Cornell SC Johnson College of Business, is senior author of “Economic Impact Assessment of Public Incentives to Support Farm-to-school Food Purchases,” which published Oct. 21 in the journal Food Policy.

Co-authors are Shayna Krasnoff, M.S. ’22, now a senior analyst at consulting firm Resonance Global; and Cheryl Bilinski, MPA ’11, local food systems specialist and farm-to-school lead at Cornell Cooperative Extension.

The key finding: In addition to a clear shift in food-spending categories (including exponentially more fruits, vegetables and beef from local farms), the government’s enhanced reimbursement to the school district was more than offset by an expected increase in GDP due to increased demand for locally sourced food.

That is, for every dollar in GDP the state spent to support the program, $1.06 of GDP was expected to be returned. But this comes with a caveat: The increase in local food spending is dependent on expansion of the related farm and food product industries – and not reallocation of existing supplies – to meet that demand.

“I think that’s really important,” Schmit said. “In the long run with a new market – like through schools – we would expect that overall demand would be growing such that it’s all new (supply), because there’s a new market for these products. But we need keep these net effects in mind, instead of just the gross effects.”

Bilinski co-chairs the Cornell Farm to School Program Work Team, and has been involved in the NYS Department of Agriculture and Markets’ 30% New York State Initiative, introduced in 2018, which substantially increases school lunch reimbursements if school districts purchase at least 30% of their ingredients as New York food products (NYFP). An item qualifies as NYFP if it is grown, harvested or produced in the state, or if the item contains at least 51% agricultural raw materials grown, harvested or produced in the state.

School districts that purchase at least 30% of their food ingredients as NYFPs qualify for enhanced school lunch reimbursements – 25 cents per lunch, instead of 5.9 cents.

“Cheryl reached out to me to say, ‘Is there a way that we can evaluate the success of the program from an economic standpoint, the impacts of increasing local purchases made by a very large school district?’” Schmit said. “Essentially, do the extra reimbursement dollars they get for meeting a local purchasing target make economic sense?”

The researchers chose to analyze Buffalo because it was by far the largest of the few school districts that qualified for the program, serving more than 29,500 lunches per day compared with an average of 1,900 lunches per day for the other districts.

Krasnoff, a master’s student at the time, pored over vendor invoices from the 2017-18 and 2018-19 school years, to detect any change in purchasing after the start of the enhanced reimbursement program. “It was a very data collection-intensive exercise,” Schmit said.

The big takeaway for Schmit: Whoever came up with the 19.1-cent increase in lunch reimbursement got it right, almost to the penny, in terms of GDP return on investment.

“To me, it was somewhat remarkable that it was really dialed in at that level,” he said. “What if it wasn’t 19 cents, but 29 cents, and you ended up with the same sort of purchasing results? Then it would have cost the state more for the same level of benefit.

“Perhaps it was by chance,” he said, “but perhaps it was some very smart people figuring out how much that extra reimbursement should be.”

This work was supported by grants from the USDA Agricultural Marketing Service Local Foods Promotion Program, and the New York State Department of Agriculture and Markets.